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S4 Capital: Sorrell must fix accounts failings and be right on ad demand

The slowdown economy is squeezing the digital advertising market. This announcement from the American social media group Snap hit technology stocks hard last week. But British advertising mogul Sir Martin Sorrell sees no sign of slowing down. On Monday, his digital marketing agency S4 Capital Report on “frenetic” new businesses. Its gross profit in the first quarter rose by more than a third.

The London-based group expects large business advertising spending to remain sustainable. Warnings apply. Apple’s software privacy changes last year have clearly hurt Meta’s business model. Moreover, customers rarely signal bad news in advance. A recession can come as a sudden and disgusting surprise.

But it is reasonable to assume that spending on digital marketing will hold up even in the recession. It is expanding its reach at the expense of analog expenses. S4 predicts that the share of U.S. digital ads in total U.S. ad spending will increase by 7 percentage points to 68 percent by 2025. S4’s other businesses, such as technology marketing technologies and digital transformation, are expected to grow at an even faster pace.

This forecast is not reflected in the share price, which has fallen by two-thirds since September. A large part of the decline was up to a Last minute delay The PwC auditor signs results due to weak controls and missing documentation.

The organizational value of the S4 is 10 times its ebitda, less than half the historical average. The product is two-thirds higher than for traditional agencies like WPP and Publicis. But it’s significantly lower than that of IT consulting firm Accenture, at a multiple of 16.

The stocks have been hit to the point where they are not widely used as currency. Sir Martin has only pledged to issue paper for purchases at a price of 425p profit before the 2021 results delay, almost a third higher than today. It will not stop trades completely, though it will slow down the pace. Technology services company TheoremOne from Los Angeles Agreed on a deal On this basis two weeks ago.

A cessation period for transactions will be a big change for a company that has agreed to 30 takeovers in a little less than four years. This will not be a bad thing. The company has amassed a wide enough spread of disciplines and geographies to support customers. Now she has to focus on getting her financial report to the end. A revival in the stock price depends on it – as well as that Sorrell is right about the demand for advertising.

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S4 Capital: Sorrell must fix accounts failings and be right on ad demand Source link S4 Capital: Sorrell must fix accounts failings and be right on ad demand

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